MR.PURVESH D ZAVERI,MUMBAI vs. ITO WARD 19(2)(5), MUMBAI

None has appeared for assessee and no valid adjournment application is on record. Left with no option, we proceed to dispose-off the appeal on the basis of material on record and after hearing learned departmental representative. 3.1 Facts on record would reveal that the assessee being resident individual was assessed for impugned AY u/s. 144 r.w.s. 147 on 22/02/2016 wherein the income of the assessee was determined at Rs.5.61 Lacs after sole addition of alleged bogus / suspicious purchases for Rs. 3.29 Lacs as against returned income of Rs.2.32 Lacs filed by the assessee on 26/09/2011. 3.2 Pursuant to receipt of certain information from the DGIT, Mumbai / Sales Tax Department, Govt. of Maharashtra, it transpired that the assessee obtained accommodation purchase bills of Rs.3.29 Lacs from an entity namely M/s. Daksha Enterprises. Accordingly, the case was reopened as per due process of law vide issuance of notice u/s 148 on 07/11/2014 which was followed by statutory notice u/s 142(1) wherein the assessee was directed to substantiate the stated purchases. The assessee’s failure to do the same and in view of the fact that notice issued u/s 133(6) to the stated supplier to confirm the transactions remained unserved, the said purchases were disallowed and added to the income of the assessee.

Purvesh D. Zaveri Assessment Year-2011-12 3. Aggrieved, the assessee contested the stand of the Ld. Assessing Officer before learned first appellate authority and inter-alia, submitted that the books were duly audited u/s 44AB and the payment to the supplier was through banking channel. In support, the assessee also filed the resale identification statement, books of account, tax audit report, copy of bank statements, copy of ledger account, xerox copies of purchase/sales invoices etc to substantiate the said purchases and pleaded for reasonable estimation. However, the said pleas could not convince learned first appellate authority, who confirmed the stand of the Ld.AO. Aggrieved, the assessee is under further appeal before us.

After careful consideration, we are of the considered opinion there could be no sale without actual purchase of material keeping in view the assessee’s nature of business. Undisputedly the assessee was in possession of primary purchase documents and the payments to the suppliers were through banking channels. The sales turnover achieved by the assessee has not been disputed by the revenue. However, at the same time, the assessee miserably failed to substantiate the purchases and could not produce the supplier to confirm the transactions and therefore, the onus casted upon assessee, in this regard, remained undischarged. Therefore, on the given facts and circumstances, the additions which could be sustained, would be to account for profit element embedded in these purchase transactions to factorize for profit earned by assessee against possible purchase of material in the grey market and undue benefit of VAT against such bogus purchases. Keeping in view Gross Profit Rate of more Purvesh D. Zaveri Assessment Year-2011-12 than 12% reflected by the assessee, we estimate the additions @12.5% of alleged bogus purchases of Rs.3,29,175/- which comes to Rs.41,147/-. The balance addition stands deleted.

Resultantly, the appeal stands partly allowed. Order pronounced in the open court on 20th November, 2019 Sd/- Sd/- (C.N. Prasad) (Manoj Kumar Aggarwal) �ाियक सद� / Judicial Member लेखा सद� / Accountant Member मुंबई Mumbai; िदनांकDated : 20/11/2019 Sr.PS:-**PP,SPS आदेश की �ितिलिप अ�ेिषत/Copy of the Order forwarded to : अपीलाथ�/ The Appellant 1. ��थ�/ The Respondent 2. आयकरआयु�(अपील) / The CIT(A) 3. आयकरआयु�/ CIT– concerned 4. िवभागीय�ितिनिध, आयकरअपीलीयअिधकरण, मुंबई/ DR, ITAT, Mumbai 5. गाड�फाईल / Guard File 6. आदेशानुसार/ BY ORDER,